If a person’s retirement account contributions may be deducted from his/her income taxes, then these contributions are considered to beMultiple ChoiceSEP contributions.IncorrectRoth contributions.tax-free contributions.post-tax.pre-tax.
Question
If a person’s retirement account contributions may be deducted from his/her income taxes, then these contributions are considered to beMultiple ChoiceSEP contributions.IncorrectRoth contributions.tax-free contributions.post-tax.pre-tax.
Solution
The correct answer is "pre-tax."
Here's why:
When a person’s retirement account contributions may be deducted from his/her income taxes, it means that the money is taken out of their income before taxes are applied. This is what is meant by "pre-tax" contributions. The money goes directly from their income into the retirement account, without being taxed. This reduces the person's taxable income for the year, which can lead to savings on their income taxes.
SEP contributions and Roth contributions are specific types of retirement accounts, and whether or not contributions to these accounts are pre-tax or post-tax depends on the specific rules for each type of account.
Tax-free contributions would not be taxed when the money is withdrawn from the retirement account, which is not what is being described in the question.
Post-tax contributions are made with money that has already been taxed. This is not the case in the scenario described in the question, where the contributions are deducted from income taxes.
Similar Questions
Which of the following is not a pre-tax account for investing?Group of answer choicessavings account401(k) plans403(b) plansPensionsTraditional IRAs
One retirement account option allows a worker to save money without paying taxes, but requires the worker to pay taxes on funds withdrawn from the account upon retirement. A second option requires the worker to pay taxes upfront, but allows the worker to withdraw funds tax-free upon retirement. Assuming that the total amount available in the worker’s retirement account at retirement is higher than the total amount contributed prior to retirement, workers can expect to pay less in taxes overall if they choose the second option.Which of the following pieces of information would be most useful in determining whether the conclusion is valid for an individual worker?(A) The amount of money the worker will contribute to the retirement plan over his or her career.(B) The amount that tax rates will increase in the future.(C) Whether or not inflation will be lower than the retirement account’s annual earnings.(D) How the worker’s tax bracket in retirement compares to his or her tax bracket while still employed. (E) The dollar value of the worker’s account upon retirement
Social Security and Medicare taxes withheld from employees’ paychecks are collectively referred to as ________.Multiple ChoiceFringe benefitsUnemployment taxesFICA taxesState income taxes
Multiple Choice QuestionState and local income taxes are deductible for:Multiple choice question.federal tax purposes.charitable donations.authorized persons.
Fill in the blank: Employees can make _____ to qualified retirement plans, such as 401(k) plans, 403(b) plans, and different IRA plans. 1 pointdirect deposits from family memberscontributions in the form of unused vacation daysdonations salary deferrals
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.